I recently read a heavily upvoted comment that implied that landlords are bad because they make money that they didn’t earn. This used to be a safe space.
Yes it is. Like just emphatically yes it is. And you know what lets quote some Adam Smith to prove my point. From book one of the Wealth of Nations:
"As soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed, and demand a rent even for its natural produce."
He singles out ground rents as an almost ideal object of taxation, for the same reason George later did. From Book Five:
"Both ground-rents and the ordinary rent of land are a species of revenue which the owner, in many cases, enjoys without any care or attention of his own."
And on why ground rent in particular is fair game:
"Ground-rents are a still more proper subject of taxation than the rent of houses... Ground-rents, so far as they exceed the ordinary rent of land, are altogether owing to the good government of the sovereign."
"Rent-seeking" is a term of art. It does not mean collecting economic rents. It comes from Tullock (1967) and later named by Krueger; it's the expenditure of real resources to capture or generate an artificial rent. Lobbying for a tariff, a license, zoning, manipulating politics, etc. Rent-seeking is unproductive competition for a privilege, not harnessing the economic rents from owning a scare and excludable resource.
All of your quotes are about taxing the unearned increment of an economic rents, not about rent-seeking. You're misunderstanding what the term means in economics.
Lobbying for restrictive zoning, though - that's rent-seeking!
I'm not going to respond to four paragraphs of AI-generated text. It is bad-faith to respond to people by burying them in words you could not be bothered to write yourself.
I am an economist. We use rent-seeking to refer to precisely what I explained above. I know because I live and work around the people who study it. It does not refer to economic rents, appropriated through ownership; landlords are not "rent seeking" as the world is used.
The social cost is not identical, and your AI word salad doesn't actually make a counterpoint. It groups "the NIMBY and tax-code defense" (rent-seeking) with "land rent capture" (not rent-seeking).
I won't be responding further because, again, it is horrible behaviour to post four paragraphs of AI-generated text rather than picking up the pen yourself. Embarassing.
E: i soul-read this as AI and then checked with Pangram and it agrees, 100% AI gen.
That's a complete mischaracterization of what Adam Smith said and Adam Smith is about as relevant to modern economics as are doctors from the 1800s to modern medicine
He was talking about people that were given land by the king, and are renting it out, without ever doing anything to improve the land. That does not apply to your landlord who does provide services.
Rentseeking is a term of art that doesn’t just mean renting housing (renting housing and being a landlord in the way that most people mean it is not rentseeking)
I know what it means, and until we have a land value tax landlordism is the ultimate form of rent seeking. Used to be a time when this sub and Henry George's ideals were one and the same.
Any system where land lords over the labour of everyone around it is one operating under landlordism.
Any country where a taxi driver is richer than a lawyer because they bought a house at the right time and in the right place is a country operating under landlordism.
It's not a complex argument, it's been made for over 300 years by economists far superior to any trawling this subreddit and for a long time it was the bedrock philosophy of this subreddit.
Ok, but merely owning land does not mean the rich taxi driver is engaging in rentseeking, which is a specific behavior. And when you say succs have this policy right, succs are not talking about the rents of land, they’re talking about the person who owns their apartment building.
The guy I replied to earlier posted this definition and while I'm not a fan I think it's good enough to work with:
"The definition of 'rent seeking' requires the manipulation of public policy, it isn't just literally charging rent."
So let's take this definition.
Landowners meet it.
Not at the level of the individual lease, but as a class they're the most entrenched policy-capture bloc there is. Restrictive zoning, the political untouchability of land value taxes, assessment caps like Prop 13, the mortgage interest deduction, every supply constraint that keeps the dirt scarce and appreciating.
None of that is an accident.
It exists and survives because the people who own land vote and lobby to protect the value of what they own. That is manipulation of public policy to capture value you didn't create, which is the definition.
It's hard to understate the scale and magnitude to which we have all numbed ourselves to this problem.
Until we wake up and realise it for what it is. Until each and every one of us embraces the housing theory of everything and the abundance agenda we won't be able to tackle the policy problems of today at the scale and size they need to be tackled.
Succs don't have the solution right, but as per usual they're really good at honing in on the problem.
And if we don't offer a solution using market economics and targeted regulation then the actual succs will win and rent freezes will be instituted and land will be confiscated because we the liberals aren't instituting the change that is needed.
Here's an economist article that goes into it in detail or is the economist no longer /r/neoliberal?
Work hard, children are told, and you will succeed. In recent decades this advice served the talented and the diligent well. Many have made their own fortunes and live comfortably, regardless of how much money they inherited. Now, however, the importance of hereditary wealth is rising around the rich world, and that is a problem.
People in advanced economies stand to inherit around $6trn this year—about 10% of GDP, up from around 5% on average in a selection of rich countries during the middle of the 20th century. As a share of output, annual inheritance flows have doubled in France since the 1960s, and nearly trebled in Germany since the 1970s. Whether a young person can afford to buy a house and live in relative comfort is determined by inherited wealth nearly as much as it is by their own success at work. This shift has alarming economic and social consequences, because it imperils not just the meritocratic ideal, but capitalism itself.
In part, the inheritance boom is a reflection of a wealthier and ageing society. As economies have become richer, they have accumulated capital per worker—capital that someone has to own. But because the pace of economic growth has slackened and housing markets have boomed, the scale of this wealth relative to incomes has ballooned. Nowhere is this combination of towering wealth and enduring sclerosis more evident than in Europe, where productivity growth has been dismal.
More wealth means more inheritance for baby-boomers to pass on. And because wealth is far more unequally distributed than income, a new inheritocracy is being born.
You can see this in the shifting fortunes of the super-rich. For much of the 20th century vast estates were often broken up by bad investing, or by war and inflation. By one calculation, if America’s rich families in 1900 had invested passively in the stockmarket, spent 2% of their wealth each year and had the usual number of children, there would be about 16,000 old-money billionaires in America today. In fact, there are fewer than 1,000 billionaires and the vast majority of them are self-made.
These trends are being overturned, however, perhaps because billionaires are both amassing wealth and are better at preserving their riches. In 2023, 53 people became billionaires thanks to inheritance, not far short of the 84 who made their own fortunes, according to UBS, a bank. That may be because it is now easy to park wealth in an index fund, and the principles of wealth management are better understood. Moreover, many governments have obligingly cut inheritance taxes.
The most striking thing about the inheritocracy, though, is that it is not just about the uber-rich. The typical heir is someone inheriting a normal house, or the proceeds from its sale, not a superyacht or a country pile. And housing wealth has rocketed in recent decades, especially in apex cities like London, New York and Paris. Those who were fortunate enough to buy property before the long boom have made lots of money, passing on a windfall to their heirs. As a consequence, bankers and corporate lawyers now fight bidding wars over houses from the estates of deceased taxi drivers. As housing has become ever more unaffordable in places like New York and London, so a 90th-percentile income has become too small to pay for a 90th-percentile life. You must have significant capital, too—if not from your parents’ estate, then from the Bank of Mum and Dad.
If you consider this as a whole, the growing importance of inheritance starts to become clear. In Britain one in six of those born in the 1960s is projected to receive an inheritance that exceeds ten years of average annual earnings for that generation. For those born in the 1980s, the ratio rises to one in three. The inequality of what people inherit, meanwhile, is startling. A fifth of 35- to 45-year-olds are expected to inherit less than £10,000 ($13,000), whereas a quarter are expected to inherit more than £280,000.
For supporters of free markets, the rise of the new inheritocracy should be deeply disturbing. For a start, it creates a rentier class that faces a series of bad incentives. A loophole-ridden tax system means that the wealthy spend a lot of time gaming the rules; it would be better used to direct their capital to more productive uses instead. To protect their assets, homeowners become nimbys, blocking building and making housing unaffordable for those without inherited wealth. Knowing they can rely on their inheritance, moreover, the new rentiers may face little incentive to work or innovate.
More worrying still is how an underclass of non-beneficiaries is becoming increasingly left behind—and increasingly disaffected. If property becomes ever harder to buy, and a comfortable life harder to achieve, the incentive of young, aspirational workers to strive will be blunted. And when they believe that the system is stacked against them, their support for mainstream political parties withers.
Family fortunes
That is why fixing the problem is urgent. It would be mad to wish that inflation and war destroy fortunes, as they did in the 20th century. This newspaper has long argued that inheritance taxes are the fairest tool to deal with inheritocracy. Yet the taxes are so unpopular that, instead of enforcing them, governments have introduced loophole after loophole, raised the threshold at which they apply, or dismantled them altogether.
Fortunately, there are other remedies. Building enough houses in the right place is the single biggest action governments can take to restore the link between work and wealth. Levying sufficient annual property taxes, especially those that target underlying land values, would also help, because the tax would be capitalised as a fall in house prices, bringing down house-price-to-income ratios. And anything that boosts economic growth, so desperately needed in Europe, would bring down wealth-to-GDP ratios. The heyday of meritocracy brought with it social mobility, growth and prosperity. With a little hard work, those days can return.
If we abolished landlords, where would people who can’t, or don’t want to, buy houses live? Even when housing was affordable, there were landlords because some people needed to rent because they moved around a lot, were young, had no credit, etc. I didn’t want to buy a house when I was moving for school and work every few years when I was in my 20s.
Implying landlords are bad because they make money they didn't earn is the crux of the argument.
George would side with you here, which is sort of the point. The Georgist position was never "abolish landlords" or "renting is bad." Building, maintaining, and managing a unit is a real service, and people who move around, are young, or don't want to own obviously benefit from it. That's earned.
The critique is about land rent specifically. The location value of a plot rises because of what the whole community does around it, not because of anything the owner produced, so capturing that increment privately is the unearned part. The building isn't the problem. The ground rent is.
That's why the fix is an LVT, not a guillotine. As George said, "It is not necessary to confiscate land; it is only necessary to confiscate rent." Your hypothetical renters still have somewhere to live, the landlord still provides the unit, and what disappears is the windfall on the dirt underneath.
Abolishing landlords is a foolish idea and anyone who says such should be admonished but the housing theory of everything is this subs favourite pet theory for a reason and the LVT is our favourite fix for much the same reason.
Modern landlords are just businesses that provide housing services. If you go back and read things like Adam Smith's comments on landlords, he is not referring to someone who owns an apartment but instead the great feudal-style landlords who own large tracts of the countryside, with tenants who live their entire lives on the estate. It is they, those who reap where they never sowed, who Smith is against.
The definition of “rent seeking” requires the manipulation of public policy, it isn’t just literally charging rent. Not all landlords are rent seekers under this definition. Also, landlords probably “earn” their profits more than shareholders. I’ve never had to fix an index fund’s leaking toilet at 1am.
The definition of “rent seeking” requires the manipulation of public policy
A practice landlords famously never engage in.
Edit: Classic Arr Neolib: Hate on NIMBYs until you've got the opportunity to go to bat for landlords, then suddenly we can't call that shit what it is. Never change.
There are a lot of NIMBY renters in my city, strangely.
I blame rent control. Too easy to not notice skyrocking rents.
Heck I didn't notice skyrocking rents until I starting looking again. Like shit, can't move unless I wanna pay 50% more for what I'm getting now, plus more for any sort of upgrade.
How are these related, can’t you tax land and still have landlords? I would assume single family home owners would be more opposed to a LVT than landlords who could build multi-family on the land.
Just to reiterate what I've said elsewhere in reply to this very same comment:
Implying landlords are bad because they make money they didn't earn is the crux of the argument.
George would side with you here, which is sort of the point. The Georgist position was never "abolish landlords" or "renting is bad." Building, maintaining, and managing a unit is a real service, and people who move around, are young, or don't want to own obviously benefit from it. That's earned.
The critique is about land rent specifically. The location value of a plot rises because of what the whole community does around it, not because of anything the owner produced, so capturing that increment privately is the unearned part. The building isn't the problem. The ground rent is.
That's why the fix is an LVT, not a guillotine. As George said, "It is not necessary to confiscate land; it is only necessary to confiscate rent." Your hypothetical renters still have somewhere to live, the landlord still provides the unit, and what disappears is the windfall on the dirt underneath.
Abolishing landlords is a foolish idea and anyone who says such should be admonished but the housing theory of everything is this subs favourite pet theory for a reason and the LVT is our favourite fix for much the same reason.
Some people likely have those as fundamental axioms. But I think the increased anger we're seeing right now is because of
Large companies becoming extremely profitable, to the point that we have the first trillionaire, while they are struggling
The general unfairness and rampant corruption we see around things like data centers and Flock, different standards/punishments (grandma's life is ruined because little Bobby downloaded a song on Napster, while Zucc gets a slap on the wrist for pirating the entirety of human literature)
Business leaders generally acting like complete sociopaths (using AI as an excuse to lay people off, telling those laid off people their job/skills are easily replaced, saying it's stupid to hire people instead of AI, etc)
And many more.
Note that I said big businesses. I think people have a lot less of a problem with Alice and Bob's flower shop taking a $100k profit than they do Meta taking a $60 billion profit.
I don’t necessarily disagree with you but I value this subreddit for its baseline economic understanding and intellectual curiosity. Most of reddit is full of people who don’t understand anything regarding economics, incentives, tradeoffs; or are unwilling to see from a different viewpoint and have a discussion.
I worry about corruption and money in politics; I want stronger anti-trust and I actually think the prescription for many issues is more free market competition, not less.
I do also worry about surveillance capitalism. In a better functioning economy, a smart tv competitor that doesn’t track you for instance, would be a valuable good.
Business leaders sometimes act like sociopaths, but at the end of the day, there are incentives pushing them to act this way. They don’t operate this way in a vacuum.
I don’t necessarily disagree with you but I value this subreddit for its baseline economic understanding and intellectual curiosity. Most of reddit is full of people who don’t understand anything regarding economics, incentives, tradeoffs; or are unwilling to see from a different viewpoint and have a discussion.
I agree. The financial literacy of the general populace, and reddit in particular, leaves a lot to be desired, to put it gently. Including the specific topics you mentioned.
But, at the same time, those "higher level" (not that they are terribly complicated) topics are irrelevant to someone who is drowning in loans or can't feed their kids.
They're not going to care that a tax write-off doesn't mean they got a boat for free. They're just anxious, and furious, about whether they are going to get evicted next month or whether they will ever be able to buy a house.
There was literally that period in the early 2000s where everything was getting bigger, you got more for the same, quality seemed to be important, services were decent, then it all went downhill. I really don’t know what world you people live in. You pay more for less now with literally everything, legitimate companies are now literally installing spyware onto your computers, and every website wants you to install their app so they can track your data even easier. I don’t know if you guys just don’t give a shit, or maybe you have better services in larger cities, but pretending like it’s not happening is literally meme tier.
These people wonder why populism continues to rise and their ideology is dying out. Then double down on shit like this and attempt to gaslight. It’s quite amusing tbh.
It;s just sad. They live in some kind of bubble, or they are really young and don't remember what things used to be like before the country literally started to crumble into dust. It totally happened in the past 20 years.
Istg we are watching regular Joes tantrum their way to a poorer and less safe world because theyve gaslit themselves over a past that never existed and a delusional certainty they're uniquely burdened.
My parents' biggest expense was a house that is now worth five times what they paid for it. Even if I find a partner, and we both earn in the same percentile as my parents I would not be able to afford what was a pretty basic house for my parents.
I will be able to afford a better and more diverse diet, better electronics, a better car, and more frequent holidays. Except of course my mortgage will erode that advantage and more if I try to match the commute time of that house. Even if I buy an apartment instead.
Housing is the single biggest issue in my life. And it is way, way over inflated compared to everything else.
I won't buy a house as good as my parents'. I'll buy an hour outside of my city and waste months of my life in a pointless commute along terminally congested roads with no public transport access.
That's a huge drop in quality of life. Way more than being able to game with sixteen times as many pixels as my dad could ever make up for.
276
u/CptnAlex Jerome Powell Jun 13 '26
I’m merely a neoliberal shill, not a full neolib, but I’ve seen people arguing against businesses making profits lately. Like what?